The Los Angeles City Council’s decision to launch a $120 million pilot program to ask developers for strategies that cut the astounding cost of publicly subsidized affordable housing has great potential and could be a model for other cities, if on a smaller scale. The per-unit cost of building a 100-unit subsidized project is nearing a staggering $425,000 in California — and per-unit costs can eclipse $550,000.

Developers of such housing patiently explain why that cost is so high — heavy regulations, the price of land, union labor requirements and more. But while these reasons may be valid, there’s got to be a better way to address California’s brutal housing crisis. The New York Times noted last week that billions of dollars have been invested in start-up companies that hope to reinvent housing. One of the companies — Silicon Valley-based Katerra — sees great promise in prefabricated housing.

Meanwhile, San Diego City Council President Georgette Gomez has outlined an ambitious agenda that includes “continuing to develop innovative housing solutions.” San Diego leaders should also work with developers to find new ways to radically transform the affordable housing industry.

A 2018 report from the Next 10 think tank warned that high housing costs mean businesses will struggle to attract and retain workers. As bad as the housing crisis is now, its impact could get far worse.